Marijuana crop could bring cash to California’s next Napa

3:08 AM 01/14/2010

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The heart of California’s marijuana production, the “Emerald Triangle,” consists of sleepy Mendocino, Humboldt and Trinity, the largest pot-producing counties in the U.S. A county-commissioned study suggested local economies in Mendocino are already two-thirds based on pot — with an estimated billion dollars in untaxed revenue.

Many people, including government members, say legalization is likely by the end of the decade.

“It will launch the birth of legal multi-billion dollar industry, that some think could one day overshadow the wine business, and make Napa Valley just a side trip on the way to the Emerald Triangle,” said Aaron Smith, California policy director of the Marijuana Policy Project, based in Washington, D.C., which advocates the legalization of the drug.

Some real-estate agents suggest large tracts of bare land, good candidates for marijuana production, are poised to rise if legalization occurs, and are already on the mend, even as the rest of California real-estate slumps.

“Oh, this can go upwards. It’s already up, despite the recession elsewhere,” a real-estate agent at Ferndale Real Estate of Humboldt County, who asked his name not be used, fearing federal reprisals, said. “Clients often inquire about tracts of land up here and the feasibility of growing pot on them. Most of the best tracts are long gone. With legalization prospects constantly in the news, few land-owners would sell now, which naturally props up land values by diminishing the supply.”

Agriculture land value has historically marched to a different beat than the rest of the economy since its value is closely correlated with the value of the crop grown on it, and the crop’s price in the marketplace.

In the 1960s land in Napa county cost a few thousand dollars an acre. Californians considered it a backwater — not a Golden State gold mine. Now, even with the real-estate collapse, it’s hard to find an acre of land in the wine region for less than a few hundred thousand dollars. Nearly 5 million tourists visit the area each year; only Disneyland has more tourists in the state.

Marijuana has some of the best profit margins of any cash crop. Pot plants can grow 10-20 feet tall, and one plant can produce as much as $5,000 worth of marijuana, at a street price of about $200 an ounce. By comparison, a single grape vine rarely can produce more than $100 of wine — and only after its been processed and shelved for months, then shipped. Marijuana buds can be picked and shipped and smoked immediately.

“One main issue for growing marijuana commercially is the land zoning,” Smith said. “When California does legalize pot, it’s likely to at first be carefully regulated and controlled.”

Some experts think special zoning will be required for commercially grown marijuana, as well as distinct water rights to protect connected farm lands and forests. The California Coastal Commission, which regulates property development near the Pacific coastline, likely will interfere with ambitions to grow as well, in an effort to protect the environment. Owning land that could commercially grow marijuana may not prove lucrative without proper permits.

Still, pot billionaires and hemp empires are expected to be forged after legalization. There will likely emerge a Robert Mondavi of the marijuana business. Agriculture companies will race to build marijuana harvesters, tractors and seeders. New pot-specific fertilizers and pesticides will be sought. Commercial development catering to hemp outfitters and smoke shops, like those in Amsterdam, will break ground and revitalize infrastructure. Counties will immediately see the benefits of increased tourism, which industry experts expect to surge in the region.

In 2005, a visiting professor of Economics at Harvard University, Dr. Jeffrey Miron, wrote a paper arguing that marijuana legalization could create more than $10 billion a year in the United States. Other experts have since agreed with him, and some suggest the amount is even higher.

“There will be a trickle down effect in everything, from real-estate value increases to new tax revenue,” said Debbie Bills, who’s worked for four years at a small hemp shop called the Hemp Connection, in Garberville, CA. “That could help us out of this recession.”